Ferrero rules out Cadbury bid as auction hopes fade

Italian confectionery firm Ferrero has reportedly abandoned plans to mount a bid for Cadbury in the latest twist in the long-running takeover saga for control of the iconic British chocolate-maker.

Cadbury - the subject of a hostile £10.5bn bid by US firm Kraft - had hoped rival bids would push any takeover price above the 725p-a-share offered by Kraft - an offer described as 'derisory' by Cadbury chief executive Todd Stitzer and well short of the 800p to 850p analysts believe investors will hold out for. Shares in Cadbury were today trading at 778.5p.

However, sources close to Ferrero have reportedly said the group would not now be proceeding with a bid, with the head of the Ferrero family believed to be keen to keep the business independent. The firm was thought to be planning a counter-bid alongside Kraft’s US rival Hershey.

Rejected: Hopes of a rescue bid for Cadbury have faded following Ferrero's withdrawal from the race

Ferrero - the owner of Tic Tac and Nutella - was seen as the most likely rival bidder for Cadbury following Nestle’s decision to pull out of the race last week.

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Sources believe Hershey could yet make its own offer for Cadbury, with
the group so far seen as being Cadbury's favoured partner. The two
groups already have a business relationship and are said to have held
talks in recent weeks.

The news comes as Cadbury steps up efforts to rebuff the Kraft bid. Cadbury yesterday issued its latest defence document, calling for shareholders not to let Kraft "steal your company" as it gave short shrift to the hostile takeover attempts.

Cadbury chairman Roger Carr reaffirmed the case for the firm to remain a standalone group with news of robust trading in 2009 and hit out at Kraft management for consistently over-promising and under-delivering in a highly-charged attack.

Cadbury will have a second chance to issue a rebuttal of Kraft's offer after markets close on Thursday - the last chance for it to issue new information under City takeover rules. Kraft has until next Tuesday, January 19, to increase its bid and Cadbury shareholders have until February 2 to accept Kraft's current offer.

If Kraft fails to garner enough support it must wait at least a year to make another approach.